1. Peruvian Mining Fiscal System MineSouthAmerica Focus on Peru Marcial García Toronto, Wednesday 5, October,2011

2. Peruvian Mining Fiscal SystemPage 2 Peruvian Mining Fiscal System at a Glance

3. Peruvian Mining Fiscal SystemPage 3 Peruvian Mining Fiscal System at a Glance Corporate Income Tax Rate (%)30 (a) Capital Gains Tax Rate (%)30 Branch Tax Rate (%)30 Withholding Tax (%) Dividends4.1 Interest4.99 or 30 (b) (c) (d) Royalties30 (d) Technical Assistance15 Branch Remittance Tax4.1 Net Operating losses (years) Carryback0 Carryforward4 years or Unlimited a)If the taxpayer has elected to enter into a Stabilization Agreement under the Mining Law, the rate is increased by 2%. b)The reduced rate of 4.99% applies on certain interest payments to non-related parties. c)Interest on loans from related parties in excess of a 3.1 debt-to-equity ratio is not deductible. d)The Peru-Canada treaty rate is 15%.

4. Peruvian Mining Fiscal SystemPage 4 Peruvian Mining Fiscal System at a Glance (cont.) VAT (%)18 Asset Tax (%)0.4 Mining Royalties (%)1-3 Excess Profit Type TaxNone Import Duties (%)0, 6, 11 Export Duties on MineralsNone Land Use Fee/Validity TaxUS$ 3/ha/yr (e) Workers Profit Sharing (%)8 Transfer Pricing RulesYes (f) Tax Treaty with CanadaYes e)Is calculated based on area of mining concession and is deductible. f)These rules are consistent with the OECD guidelines

5. Peruvian Mining Fiscal SystemPage 5 Peruvian Mineral Sector Fiscal Reform

6. Peruvian Mining Fiscal SystemPage 6 Tax climate – What are the hot issues today? Mineral Sector Fiscal Reform ►June 5: Left-wing former army officer Ollanta Humala won Peru`s presidential election. One of Humala´s key election promises was to make mining companies pay more taxes at a time of high prices for Peru´s major mineral products (such as copper, silver and gold) in the international market. ►August 25: Prime Minister, Salomon Lerner announced that the government had reached an agreement with mining companies to increase their contributions to the state by an extra US$ 1.1 billion. ►14 September: President Humala´s administration submitted three different bills to the Peruvian Congress for approval. ►19 September: Congress committees of (i) economy and (ii) energy and mines approved with minor changes proposed legislation. ►22 September: The full assembly of Peru´s Congress approved mineral sector fiscal reform. ►29 September: Laws 29788, 29789 and 29790 approving the Modified Royalties, Special Mining Tax (SMT) and Special Mining Burden (SMB), respectively, were enacted and published in the official Gazette “El Peruano”. The regulations of the SMB were approved by Supreme Decree 173-2011 and also published. ►1 October: Laws 29788, 29789 and 29790 became in force.

7. Peruvian Mining Fiscal SystemPage 7 New Mineral Sector Fiscal System Operating Profit Margin Ratio = Operating Income x 100 Mining Operating Revenue Where: Mining Operating Revenue = revenues generated from the sale of mineral resources with certain adjustments (e.g. final settlement payment adjustments to account for final weights, final essays and final metal quotations). Operating Income = Mining Operating Revenue minus (i) cost of goods sold (“COGS”) and (ii) operating expenditures (including sales and administrative expenses) calculated under Peruvian GAAP, with the following exceptions: Exploration expenditures must be allocated on a pro-rata basis over the life of the mine. Interests are not deductible, regardless of whether they have been capitalized as part of COGS or treated as operating expenditures. SYSTEM BASE RATES BASED ON OPERATING MARGIN MINIMUN PAYMENTS TREATMENT FOR INCOME TAX PURPOSES Royalties Special Mining Tax (SMT) Special Mining Burden (SMB) WITHOUT TAX STABILIZATION (*) With Tax Stabilization Substitutes Current RoyaltiesNew CONCEPT 1% to 12%2% to 8.4%4% to 13.12% Operating Income Deductible (*) Tax Stabilization agreement under the Mining Law General 1% of salesN/A

8. Peruvian Mining Fiscal SystemPage 8 Existing Progressive Royalty Scale based on value of sales Marginal Rates Not over US$ 60 million: 1% Over US$ 60 but not over US$ 120 million 2% Over US$ 120 million 3% Modified Royalties – The higher of a) or b) (1) Rate considers upper limit of the scale Without Tax Stabilization Agreement: Royalty Regime Operating income Marginal Rate Effective Rate (1) Under 101,00% 10 to 151,75%1,25% 15 to 202,50%1,56% 20 to 253,25%1,90% 25 to 304,00%2,25% 30 to 354,75%2,61% 35 to 405,50%2,97% 40 to 456,25%3,33% 45 to 507,00%3,70% 50 to 557,75%4,07% 55 to 608,50%4,44% 60 to 659,25%4,81% 65 to 7010,00%5,18% 70 to 7510,75%5,55% 75 to 8011,50%5,92% More than 8012,00%7,14% a)Scale based on operating income (b)Royalty of 1% of sales

9. Peruvian Mining Fiscal SystemPage 9 Without tax Stabilization Agreement: Special Mining Tax (SMT) The SMT will apply on operating profit derived from sales of metallic mineral resources, regardless of whether the mineral producer owns or leases the mining concession. The tax liability will arise and will be payable on a quarterly basis. It will be deductible for corporate income tax purposes. Not applicable to non-metallic mining. Small miners are exempt. (1) Rate considers upper limit of the scale

10. Peruvian Mining Fiscal SystemPage 10 Fiscal Regime with Tax Stabilization Agreement: Special Mining Burden (SMB) It will apply to mines with Tax Stabilization Agreements entered into under the General Mining Law. “Voluntary” payments are to be made on a quarterly basis according to individual agreements to be entered with the Peruvian government. The SMB is not a tax as determined by general legal principles given that it is not a compulsory payment imposed under Peru´s authority to levy taxes. Mining and contractual royalty payments, if applicable, are creditable against SMB payments. (1) Rate considers upper limit of the scale

11. Peruvian Mining Fiscal SystemPage 11 Effective Tax Rate (ETR) 30 35 40 45 50 55 60 10%20%30%40%50%60%70%80%90% Old System (Royalties) New Systems (SMT) Modified royalties Operating margin (operating income / sales) Withouth Tax Stabilization ETR Based on Profitabilty % of before tax income: Source: Apoyo Consultoría 1) Assumes 70% of income is distributed as dividends 2) includes income tax, workers profit sharing, royalties SMT and W/T dividendds 35 37 39 41 43 45 10%20%30%40%50%60%70%80%90% Old System New Systems (SMB) With Tax Stabilization ETR Based on Profitability % of before tax income: 1/ Assumes 70% of income is distributed as dividends 2/ includes income tax, workers profit sharing, royalties SMB and W/T dividends Source: Apoyo Consultoría Operating margin (operating income / sales)

12. Peruvian Mining Fiscal SystemPage 12 Effect on Tax Revenues RoyaltySMTSMBTotal Existing Projects50322536908 New Projects50 32 61143 Total1003545971,051 Without considering the effect of their deduction for income tax purposes Source: MEF Estimated additional Tax Revenues per year (US$ million)

13. Peruvian Mining Fiscal System MineSouthAmerica Focus on Peru Marcial García Toronto, Wednesday 5, October,2011